Question
Under your six-year savings plan, you deposit P1000 now, and P1000 at the end of the fourth year, in a bank account that earns 8%
Under your six-year savings plan, you deposit P1000 now, and P1000 at the end of the fourth year, in a bank account that earns 8% per year, compounded annually. You withdraw all your accumulated interest at the end of the second year, and the further interest plus principal at the end of the sixth year. a) Tabulate the cash flows and the balance in your investment account. b) Draw a cashflow diagram for the bank. c) Compute the penalty (suffered by you) for early withdrawal of interest at the end of the second year. Please show COMPLETE solution
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